Market -Weekly Outlook Oct 16 2017

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Last Week Recap

At the beginning of the week, the pound rose against the dollar on positive U.K Manufacturing Production data, the report showed that U.K data remained the same as the previous month at 0.4%. Analysts had expected it to slip to 0.2% a month earlier! This development not only supported the GBP but it also affected the dollar against other major currencies.

On Wednesday, the USD falls on Fed’s split about Inflation, the report showed many participants expressed concern that the low inflation readings this year may reflect not only transitional factors but also the impact of developments that could be more stable. The data increased expectations that the Federal Reserve will raise interest rates in December for the third time this year.

Expectations that US interest rates will rise help to support the dollar by making US assets more attractive to investors seeking returns.

The dollar fluctuated against a basket of other major currencies on Friday after mixed consumer inflation data.

U.S Dollar Index Sees Sideways Market.

according to the weekly chart, the pair is bullish above 92.55 levels with eyes on the 95.00 levels, followed by 96.00 then 97.47 levels. On the downside, a failure to hold above 94.05 levels on a weekly closing basis could mean a return to the 92.55 levels, buyers should return here and push it to the upside but if this fails to occur, more decline will be seen to the 91.00 levels…Anyway: The U.S Dollar index continues to face upside threats above the 92.94 levels in the medium-term forecast.

In the short-term forecast, as long as 93.15 resistance holds on a daily closing basis, the USD Index remains on the downside to the 92.30 levels, a halt is likely and turn higher from here, but a cut would open 91.85, further down support stands at the 91.18 levels.

On the upside, above 93.15 sees a recovery risk to the 94.05 levels, above that will restore the upside momentum and open the 95.0/95.57 levels.

Conclusion: The weekly chart suggests strong rebound to the upside from 92.55 levels towards the 94.00 levels, a break on a weekly closing basis will pave the way to the 96.00/97.47 levels, but on daily timeframe; the pair is bearish below 93.15, it may dip to 92.30 levels before the next rising. At this point you need to keep an eye on 2 factors:

1- The daily support around 92.30, a sustained breakout below that level on a daily closing basis will suggest that possible failure of the weekly support 92.55…

2- A rejection from 92.30 could mean a return to the 94.00 levels, but you need to keep an eye on 93.15 levels, we have a strong static resistance at that level, a daily closing above 93.15 will pave the way to the 94.00 levels where a break will aim weekly target at the 95.00 levels first.

USDINDEX Weekly Chart – Click to enlarge
USDINDEX Daily Chart – Click to enlarge

Ahead of the coming week, here is a list of the biggest events on the economic calendar that are most likely to affect the markets this week:

Monday, October 16

New Zealand will release data on consumer inflation.

Tuesday, October 17

The Reserve Bank of Australia will publish the minutes of its latest policy meeting.

The UK will release inflation data. Later in the day, Bank of England Governor Mark Carney will speak before the Treasury Select Committee, in London.

Germany will report on its ZEW Economic Sentiment.

The eurozone will release revised data on consumer inflation.

Philadephia Fed President Patrick Harker speaks.

Wednesday, October 18

ECB President Mario Draghi will speak in the opening remarks in Frankfurt.

The UK will publish its latest employment report.

New York Fed President William Dudley Speaks.

Dallas Fed President Robert Kaplan speaks.

The U.S will release data on building permits and housing starts.

The U.S  Energy Information Administration will release weekly data on oil and gasoline stockpiles.

Thursday, October 19

Australia will publish its latest jobs report as well as private sector data on business confidence.

China will release data on third-quarter GDP growth along with reports on fixed-asset investment and industrial production.

The UK will report on retail sales.

The U.S will release the weekly report on jobless claims and data on the Philadelphia Fed Manufacturing Index.

Kansas City Fed’s Esther George speaks.

Friday, October 20

Canada will report on retail sales and inflation.

The U.S will release data on existing home sales.

Cleveland Fed President Loretta Mester speaks.

You can follow the rest of the week’s economic events by visiting: